Guidance Residential LLC offers a home financing model that they claim to be halal, known as the Declining Balance Co-ownership Program. This method is designed to comply with Shariah principles by avoiding riba (interest). The company’s model involves co-ownership of the property, where the homebuyer gradually buys out Guidance Residential’s share while paying a usage fee.

Arguments in Favor:

• Islamic Finance Scholars: Guidance Residential has worked with Islamic scholars to ensure their model is Shariah-compliant. The Declining Balance Co-ownership Program is structured to be riba-free and has been approved by independent scholars.
• Customer Co-ownership: Instead of a traditional loan, the model involves co-ownership, where payments include buying out the financier’s share and paying a fee for the use of the property.
• Riba-free Structure: The company emphasizes that their model avoids interest, a key prohibition in Islamic finance.

Arguments Against:

• Concerns of Riba: Some scholars and sources, like the fatwa from Mufti Ebrahim Desai, argue that the scheme involves elements of riba, making it impermissible. They claim that the profit payment is essentially disguised interest.
• Lack of Response: Attempts to get detailed clarifications from Guidance Residential have been met with insufficient responses, raising concerns about transparency and compliance.
• Customer Feedback: Discussions on forums reveal that some customers feel the terms are merely reworded to appear halal while still involving conventional interest principles. There is skepticism about the genuine Shariah compliance of the product.

Conclusion: The permissibility of using Guidance Residential’s home financing product depends on individual interpretation and consultation with knowledgeable scholars. While the company asserts its compliance with Islamic principles, some scholars and customers express doubts. It is crucial to review all documentation and seek independent advice to make an informed decision.

Sources:

• AskImam
• Guidance Residential
• Customer Discussions on Reddit and Other Forums

And Allah knows best.